Three giant Turkish firms eye higher growth for future

ISTANBUL - Hürriyet Daily News

Twin towers of Turkish conglomerate Sabancı (L) located at Istanbul’s financial district Levent are seen. Sabancı’s net profit fell by 1.2 percent to 1.86 billion liras, as the company announced. DAILY NEWS photo, Emrah GÜREL

Turkey’s three largest conglomerates, Koç Holding, Sabancı Holding and Yıldız Holding, all posted lower-than-expected financial figures for 2012 due to slower economic growth in Turkey and falling demand in debt-choked Europe, which has been the traditional export market for Turkish goods. However, the three companies hope to get their incomes back on track in 2013 with new domestic and overseas projects.

Koç Holding, the largest of the three and also Turkey’s largest listed conglomerate, announced on March 8 its net profit had risen 9 percent to 2.3 billion Turkish Liras last year.

Koç, a backbone of the Turkish economy, undertook 10 percent of Turkey’s exports last year, and it hopes its outlook will improve next year, along with the Turkish economy.

The company had invested 4.9 billion lira in 2012, its highest investment level ever, despite slower Turkish economic growth, Chief Executive Turgay Durak said, adding they planned a record 6.8 billion lira of investment in 2013, much of it expected to be for the upgrade of its Tüpraş oil refining business.

“We expect growth dynamics to accelerate again in 2013 and for Turkey to grow by 4.5 percent,” Durak also said in an emailed statement.

Koç Holding’s consolidated sales rose to 77.5 billion lira from 69 billion, with every sector except automotive contributing to the growth.

Koç’s 2012 figures may not be as high as expected from a giant company of its size, but they appear to be higher than its archrival Sabancı Holding, the second largest company in Turkey, whose profits fell.

Sabancı’s profits fell

The net profit of Sabancı slipped by 1.2 percent to 1.86 billion liras from 2011’s 1.88 billion, despite sales rising by 9 percent to 11.6 billion liras.

The company’s fourth-quarter net profit was 657.3 million lira, up 93 percent, but this failed to save the overall figures.

“Despite the economic growth slowdown in Turkey hitting corporate profits last year, Sabancı exceeded its targets,” Sabancı Chief Executive Zafer Kurtul said.

The company is holding its breath for higher growth helped by new projects in 2013.

“Our hydropower plant projects will become operational in 2013 and 2014 and will make a significant contribution to our income and profitability in the coming years,” Kurtul said.

Initial public offerings for energy unit Enerjisa and insurer Avivasa will boost Sabancı share values further, he added, without specifying dates for these.

Meanwhile, despite raising its net profit by 78.9 percent, Turkey’s largest food group Yıldız Holding also eyes to stimulate its growth which remained at modest levels last year since “it it was a year to set its house in order,”as Chief Financial Officer Cem Karakaş expressed.

“So (sales) growth was 6-10 percent in 2012. This year growth should be double-digit,” Karakaş said.
Having exhausted growth opportunities at home, Yıldız has set its sights on doubling its overseas sales within five years, its executives told Reuters on March 7.

According to figures, the net profit of Yıldız’s biscuit company, Ülker, has plummeted by 74.6 percent, and now stands at 166.97 liras. However, this fall is due to the abnormal rise in profits in 2011, when the company earned a huge income by selling its old BİM.

Ülker says it is aiming for overseas sales of $2 billion by 2018, more than double 2011’s $790 million, with western China, sub-Saharan Africa and Central Asia. Yildiz already has a 50 to 60 percent share in some categories of the food market in Turkey, CFO said.